Deloitte first turned the spotlight on the importance of the middle market as America’s economic engine in our 2011 survey report. Since that time, we have produced a number of additional reports focused on this critically important, but often overlooked, segment of the American economy. We now welcome this opportunity to connect directly with mid-market companies and invite you to share your voice on our blog pages.
We are committed to providing insights on mid-market issues and trends and other news we think may be on interest to you. Our goal is to host an interactive platform that promotes dialog about what matters most to you and your company.
National Managing Partner
Deloitte Growth Enterprise Services
Posted by Tom McGee May 15, 2013
The media attention that large public companies receive when they begin talking about finding their next CEO shouldn't surprise anyone, even if the change isn't imminent. Large, successful companies often begin laying the groundwork for C-suite successions years in advance. Why? They understand that working without a succession plan can invite disruption, uncertainty and conflict. It can also threaten an organization's future competitiveness and growth prospects.
Such risks aren't unique to large, public companies. In most cases, smaller private companies would benefit from careful and deliberate succession planning as well. Deloitte recently hosted a Dbriefs webcast on corporate governance with more than 2,000 registrants attending. In response to polling questions during the webcast, one in five attendees indicated their organizations would likely experience a change in executive leadership within the next three to five years.
And yet, only a small minority of those polled said their boards review CEO succession plans at least once a year. A full fifth said their boards tackle the issue only when a change in circumstances requires it. These results mirror those of a 2012 report from the National Association of Corporate Directors, which found that fewer than one in four private company boards have a formal succession plan in place.1
Many private companies are family-owned or controlled and the issue of succession can introduce deeply emotional personal issues into the equation. They are also susceptible to significant skills and experience gaps for second- and third-generation successors. A well-planned transition can help address these divides and maintain harmony among family members – two traits necessary to ensure the long-term survival of the business and preserve the wealth its founders have so carefully built.